As the Google antitrust discussion heats up on its way toward some culmination at the FTC, I thought it would be helpful to address some of the major issues raised in the case by taking a look at what’s going on in the market(s) in which Google operates. While not dispositive, these “realities on the ground” do strongly challenge the logic and thus the relevance of many of the claims put forth by Google’s critics.

The case against Google rests on certain assumptions about how the markets in which it operates function. But these are tech markets, constantly evolving and complex; most assumptions (and even “conclusions” based on data) are imperfect at best. In this case, the conventional wisdom with respect to Google’s alleged exclusionary conduct, the market in which it operates (and allegedly monopolizes), and the claimed market characteristics that operate to protect its position (among other things) should be questioned.

The public claims by Google’s critics and the best information we have on the thinking of the regulators investigating the company reflect an over-simplified and inaccurate conception of the competitive conditions facing Google and its competitors. The reality is far more complex, and, properly understood, paints a picture that undermines the basic, essential elements of an antitrust case against the company.

Market Definition and Monopoly Power

Under US antitrust law, a firm must possess monopoly power in a relevant market for its conduct to be actionable. A “relevant market“ “is composed of products that have reasonable interchangeability for the purposes for which they are produced — price, use and qualities considered.” For casual purposes, Google is said to operate in the “online search” and/or “online search advertising” markets. But for purposes of antitrust analysis, both of these are simply too narrow.

Users use Google because they are looking for information — but there are lots of ways to do that, and “search” is not so distinct that a “search market” instead of, say, an “online information market” (or something similar) makes sense. Users can and do search for and find information online from myriad sources other than search engines, ranging from informational sites (Wikipedia) to retail sites (Amazon) to social media (Facebook) to apps and connected software offering all of these varieties of information.

For advertisers, the case for a search-specific market is even weaker. Advertisers don’t care whether you see their ads and navigate to their sites (or buy their wares) via a search page, a friend’s Facebook post, or a porn site; virtually any blank space on a web page (or in an app) will do. As long advertisers are able to place ads that successfully reach those users who are most interested in buying what they’re selling, the specific mechanism by which the matching of users with advertisers is accomplished is of no competitive significance.

In other words, Google competes in the market for targeted eyeballs: a market aimed to offer up targeted ads to interested users. Search is important in this, but it is by no means alone, and there are myriad (and growing) other mechanisms to access consumers online:

Of singular importance, Amazon recently announced that it is entering the online advertising space, and its emerging foray into advertising helps to point up exactly why it's competition for eyeballs, not search ads per se, that defines the relevant market. In fact, Amazon presents a novel and potentially transformative challenge to online advertising as we know it:

Facebook knows who your friends are. Google knows what you’re interested in finding on the [I]nternet. Amazon knows what you’ve bought, and has a pretty good idea of what you might want to buy next. If you were an advertiser, which company’s data sounds most valuable to you? If you had a product you wanted to sell, which of those things would you most want to know?

[A] DSP [Demand Side Platform] powered by Amazon’s rich data changes the competitive landscape. “The winner in the media game is the one who can best identify a user and match that user up with an affiliation that an advertiser cares about,” [notes the CEO of an ad firm].

Today that may (or may not) be Google. Tomorrow that may be Facebook and other social media sites. Next week it may be Amazon or other retailers. And next month it may be something else entirely. To define the relevant market here in terms of the particular mechanism that prevails to accomplish the matching of consumers and advertisers does not reflect the substitutability of other mechanisms that do the same thing but simply aren’t called “search.”

In a world where what prevails today won't — not "might not," but won’t — prevail tomorrow, it is the height of folly (and a serious threat to innovation and consumer welfare) to constrain the activities of firms competing in such an environment by pigeonholing the market.

The ability to generate revenue from online matchmaking turns, of course, on the quality of the match. All else equal, an advertiser interested in selling widgets will be willing to pay more for an ad viewed by a user who can be reliably identified as being interested in buying widgets.

But Google’s primary mechanism for attracting users to match with advertisers — general search — is substantially about information, not commerce. In fact, Google doesn’t even bother to serve up ads for fully 70% of searches run on its site precisely because these users are not looking for anything monetizable.

In a properly defined market — say, a market for targeted eyeballs — while undeniably significant, Google may not even be dominant. And Amazon (not Amazon the online advertising company, but Amazon the retailer), may be its most significant competition:

In 2009, nearly a quarter of shoppers started research for an online purchase on a search engine like Google and 18 percent started on Amazon, according to a Forrester Research study. By last year, almost a third started on Amazon and just 13 percent on a search engine. Product searches on Amazon have grown 73 percent over the last year while searches on Google Shopping have been flat, according to comScore.

These impressive statistics suggest that Google lacks market power in a critical segment of search—namely, product searches. Even though searches for items such as power tools or designer jeans account for only 10 to 20 percent of all searches, they are clearly some of the most important queries for search engines from a business perspective, as they are far easier to monetize than informational queries like “Kate Middleton.”

The distinction between product and informational searches is crucially important to understanding Google’s market and the surprisingly limited and tenuous market power it enjoys.

Google’s original, core “ten blue links,” general search model is not particularly well-targeted to capturing the more-valuable product searchers. Today Google has attempted to better capture these with innovations like Google Shopping, Zagat restaurant ratings and Flight Search. But its success here has been rather meager:

It is ironic that Google’s relatively trivial product and service search innovations are precisely the changes in Google’s business model that have brought about the antitrust charges against it — and give rise to claims of oppressive dominance.

But without them, Google’s revenue stream would be in real danger. Should Google be penalized for “following the money”? Consigning it to a shrinking world of unadorned URL links without attractive content for product or service searchers, just as competitors learn better ways to separate the likely buyers from the information seekers, is not the proper province of antitrust. Rather, it's the cynical ploy of competitors looking to use antitrust to make their jobs easier. But what is easier for Kayak happens to be bad for consumers.

Separating procompetitive from anticompetitive conduct is hard, but labeling as “anticompetitive” actions employed by a company evolving its product to keep up with competitive challenges arising from technological shifts and evolving consumer demand is almost certain to be wrong — even when that company was wildly successful before such evolution.

And there is another sense in which Google may not be as dominant as it looks — it depends on what the meaning of “search” is. Data is not readily available, but common sense tells us that consumers “search” for music more often on iTunes than on Google (and certainly they actually purchase music there significantly more often). Ditto books (and all manner of retail goods) and Amazon (and here we do have some data: as noted above, 33% of users initiate product searches on Amazon compared with 13% for general search engines (not limited only to Google)).

But data used to identify Google’s claimed market share doesn’t even include iTunes searches (nor those searches at Amazon, Best Buy and other retailers initiated through their apps). And these are the most valuable of the valuable searchers — users looking not only for products, but looking for products in places where the norm is that products are actually purchased; in other words, real, immediate consumers.

This is a real problem for Google, which struggles to attract these folks with its iTunes/Amazon competitor, Google Play (which has gone through several iterations already in an effort to attract and keep users). But to the dominance point: Although casual language doesn’t describe iTunes as a “search” site, a proper economic definition of an “online search market” should most certainly include iTunes (as well as Amazon and other online retailers). In this market, Google is hardly the most significant player.

And then there’s Facebook. Facebook already offers information to its users that substitutes for Google search, but you don't hear about it — it doesn’t show up in the denominator because, like iTunes, it’s not considered "search." But it is the web site on which users spend the most time (almost six times more than Google) and thus enormously significant in the competition for eyeballs. And every time a Facebook user asks for information from friends and/or simply follows links he finds there instead of searching on Google, he spends a little less time on Google and uses its search services a little less.

But the competition between Google and Facebook is about to become even more direct:

And now Facebook is getting into search. At a Disrupt conference last week, Mark Zuckerberg explained that search engines are evolving into places where users go for answers, and that Facebook is uniquely positioned to compete in that market: “And when you think about it from that perspective, Facebook is pretty uniquely positioned to answer a lot of the questions that people have. So what sushi restaurants have my friends gone to in New York in the past six months and liked? . . . . These are queries that you could potentially do at Facebook if we build out this system that you just couldn’t do anywhere else.

In other words, it is unsupportable to maintain a market definition for what we normally think of as “online search,” and in a proper market, Google looks significantly less dominant. More important, perhaps, as search itself evolves, and as Facebook, Amazon and others get into the search advertising game, Google’s strong position even in that narrow market looks far from unassailable.

Anticompetitive Harm

Which brings us to the theory of antitrust harm: foreclosure. In the US, antitrust law bars a company not from making life a little harder for competitors but only from preventing them from reaching viable, effective scale. That company must be protected by barriers to entry (which facilitate market power) and operate under a duty to deal with other companies. Google is not such a company.

In the first place, as noted above, there are many avenues by which online companies can access users and match them with advertisers. In addition to these, Microsoft successfully competes for its own exclusive arrangements with sites that use its Bing search engine. Moreover, Microsoft ensures that consumers access Bing by making it the default search service through its own Internet Explorer browser, in Windows 8 apps, through distribution deals with PC manufacturers, and on Blackberry, Windows Phone, and even some Android devices.

Nextag and other putative competitors of Google’s (i.e., “vertical search” engines, retailers, online map services, etc.) often note that some percent of their traffic comes from Google, and when this drops, it can kill their business. They go on to conclude that Google is therefore a bottleneck, poised to foreclose their access to consumers and/or Internet users. In other words: our customers or the audience for our advertisers reach us through Google, and Google can and does foreclose our access to these audiences and customers because it sees us as threats — and because it can.

Again, antitrust law doesn't require that Google or any other large firm make life easier for competitors or others seeking to access resources controlled by these firms. But even setting aside the legal technicalities, this claim is simply specious.

For many sites, increasing (and already substantial) traffic comes not from search but from social — both social media and what a perceptive article in the Atlantic calls "dark social" (email, texts, IM, etc.). People and their eyeballs are online in lots of ways — as it happens, some they (and regulators) aren’t even entirely aware of. An AllThingsD article titled “Nobody ‘Goes Online’ Anymore” makes the point:

People still post photos and talk to each other online all the time . . . but they may think of them differently because they may be doing them on services like Facebook and Twitter. We’re seeing somewhat of a cannibalization of other Internet activities because it’s possible to do all that on social networking sites.

But this isn’t merely time spent online; it’s time spent online interacting in ways that likely offer better opportunities for matchmaking than search advertising does, and is thus a substantial and powerful outlet for access to targeted eyeballs. As Nielsen recently reported:

Ninety-two percent of consumers trust earned media, including word-of-mouth and recommendations from friends and family, above other forms of advertising.

As a result, advertisers are increasingly targeting not paid search but rather social media to reach their target audiences:

[A recent industry analysis] found that social media marketing was just behind paid-search for SMBs [small and medium sized businesses] in 2011. Given the ambivalence that many SMBs feel about paid search (though not organic) one could expect that social media advertising and other promotional spending would surpass paid search in 2012.

This trend has directly affected Google, which has been forced to innovate (note: not crush the competition, but find new ways to maintain relevance):

The new algorithm is recognition that Google, whose dominance depends on providing the most useful results, is being increasingly challenged by services like Twitter and Facebook, which have trained people to expect constant updates with seconds-old news.”

And this doesn't even get at what is possibly the most significant source of competition for Google and its business of connecting eyeballs with advertisers and other sources of information: "dark social." However much time users are spending on Google and Facebook, they are spending more on email, text and IM. And an enormous amount of highly-trusted (read: extremely valuable to advertisers) information, links, product reviews, price comparisons, etc. passes through these. As the Atlantic article linked above notes:

The sharing you see on sites like Facebook and Twitter is the tip of the 'social' iceberg. We are impressed by its scale because it's easy to measure.

But most sharing is done via dark social means like email and IM that are difficult to measure.

According to new data on many media sites, 69% of social referrals came from dark social. 20% came from Facebook.

All in all, direct/dark social was 17.5 percent of total referrals; only search at 21.5 percent drove more visitors to this basket of sites. (FWIW, at The Atlantic, social referrers far outstrip search. I'd guess the same is true at all the more magaziney sites.).

This is far from irrelevant when it comes to access by sites (and their advertisers) to potential users and consumers, and any reasonable assessment of foreclosure (for competing websites seeking access to users) must include social — both dark and social media — in its calculations. As far as we know, right now it does not.

But even for those firms that get much or most of their traffic from free, “organic” search (rather than from search ads or other sources), this fact isn't an inevitable relic of a natural condition over which only the alleged monopolist has control; it's a business decision, and neither sensible policy nor antitrust law is set up to protect the failed or faulty competitor from himself.

In fact, SEO — the process by which sites adjust and position themselves precisely toattract search traffic — is huge business. The point is, traffic from search isn’t "natural," and a site’s success or failure in obtaining traffic in this way isn’t a natural condition from which it can’t escape; rather, it's an opportunity worth exploiting.

Meanwhile, content-based marketing (like SEO and the online search advertising apparatus on which it’s based) is being challenged by audience-based marketing. According to an AT&T survey, more than 60% of brand marketers believe that audience-based marketing — aimed at the display ads in which Facebook and other social media enterprises have an advantage — will replace content targeting.

While ad revenues from search, where Google has a lead, currently account for just under 50 percent of the total online pie, Google’s long term position in search advertising is hardly unassailable as advertising opportunities mature on various social networks. Ad revenues from these networks are projected to grow nearly 50% this year, with Facebook continuing to attract an overwhelming majority of this growth. Increasingly, access to eyeballs will come from sources other than search.

But just because complaining sites like Nextag and other sites (many other sites) may have bet their success and built their businesses on SEO instead of something else doesn't then make Google responsible for preserving Nextag's choice, whether doing so benefits Google at Nextag’s expense or not.

Nextag — which has the ear of regulators looking into Google’s business — has built its case on precisely this claim, even as it adopts available (even innovative) solutions to mitigate the effect.

[Nextag’s] Google traffic now costs more. Two years ago, 60 percent of Nextag’s traffic from Google was from free search and 40 percent paid — people clicking on ads Nextag bought. Today, it is 30 percent free and 70 percent paid.

Thus, Nextag complains, Google’s adjustments to its algorithm have impaired the company’s business, and antitrust law should bar Google from doing so.

But notice what’s going on. Nextag, apparently, isn’t failing; it isn’t unable to access sufficient users and advertisers to maintain viable scale; it’s just encountered a circumstance in which its previous method of doing so is less attractive to it than it once was.

But one source of market access can replace another. Social media optimization substitutes for SEO; paid advertising substitutes for organic; audience targeting substitutes for content targeting; and purchased data substitutes for self-created data. Does it cost more? Possibly, but relying on “free search” wasn’t actually free either: Nextag isn’t bragging about what it used to spend on SEO to ensure that 60% of its traffic came from organic search, but it was surely a substantial amount.

But his [Nextag’s founder’s] company has also shifted its strategy to become less vulnerable to Google’s charge into commerce. It has invested heavily in its underlying technology to help Web sites attract visitors, especially ones most likely to buy their goods. Wize Commerce, the Nextag owner, is based in San Mateo, Calif.; it is profitable and employs 450 people. The revised plan, Mr. Katz says, “gives us a shot at being a very healthy company,” less dependent on Google."

Nextag is employing self-help — quite successfully — and in the process it may actually come out ahead. And even better for consumers, this competition may spur both Nextag and Google to innovate in ways that are both unanticipated and potentially disruptive to Google’s allegedly dominant business. This is, as they say in software development, isn’t a bug; it’s an undocumented feature.

The Nextag story also reveals another problem with the critics’ foreclosure analysis. Although it often goes unremarked, paid search's biggest competitor is almost certainly organic search (and vice versa). Nextag may complain about spending money on paid ads when it prefers organic, but the real lesson here is that the two are substitutes — along with social sites and good old-fashioned email, too.

If the question is access — foreclosure — it is incumbent upon critics to accurately assess the "but for" world without the access point in question. Here, Nextag can and does use paid ads to reach its audience (and, it is important to note, did so even before it claims it was foreclosed from Google’s users). But there are innumerable other avenues of access, as well. Some may be "better" than others; some that may be “better” now won’t be next year (think how links by friends on Facebook to price comparisons on Nextag pages could come to dominate its readership).

This is progress — creative destruction — not regress, and such changes should not be penalized.

Error Costs and the Risks of Erroneous Enforcement

We've been here before in the relatively short history of high-tech antitrust, and, interestingly, in a manner that bears directly on the analysis in Google’s case.

Microsoft’s market position was unassailable . . . until it wasn't, and even at the time, many could have told you that its perceived dominance was fleeting (and many did). Larry Lessig, one of those charged with assessing the claims against Microsoft, even apologized for “blowing it” by not anticipating potential competition in the desktop market — and he was talking about Linux, not Apple, which is now the world’s most valuable company.

Now, relative to Microsoft’s share value, Apple share values have increased almost 60 times, largely because of Apple’s new products and the market’s anticipation of its future products.

Apple’s success (and the consumer value it has created), while built in no small part on its direct competition with Microsoft and the desktop PCs which run it, was primarily built on a business model that deviated from its once-dominant rival’s — and not on a business model that the DOJ’s antitrust case against the company either facilitated or anticipated.

As this chart shows, what's happened since Microsoft’s heyday is an explosion of devices, each competing to provide consumers with various tools for doing what they want to do on computers. Much of this was once provided by Microsoft-driven PCs, but much of it is novel (but still displacing PC sales, nonetheless):

Sure the Windows PC is still on top, but look how many other devices are being sold to compete with the desktop PC that, for regulators — mistakenly — once entirely defined the relevant market.

But note also what this means for understanding Google’s market. Microsoft and Google’s other critic-competitors have more avenues to access users than ever before. Who cares if users get to these Google-alternatives through their devices instead of a URL? Access is access.

Moreover, this rise in variety of devices also carries with it a whole new range of business models, each capable of affecting the importance of Google for every constituency, from users to advertisers to websites. Today Kindle Fires are sold bundled with Amazon’s services. Tablets and mobile devices have elevated apps to the height of competitive importance as an entirely new mechanism for accessing online content. Advertisers can buy space right on devices’ start pages and can access different and novel forms of data. Next may be the Facebook phone.

Every one of these is a challenge to Google’s (and every other player’s) business model and revenue stream. The notion of a durable monopoly in this evolving and uncertain environment is fanciful, and the claim of consumer harm untenable.

Antitrust enforcers’ imprecise predictions about the future in the Microsoft case point up a significant problem for antitrust: the risk and costs of antitrust “getting it wrong,” impairing rather than promoting the competitive process.

The Nextag saga highlights these concerns and their potential costs to consumers. We hear so much about monopolists not innovating, about their inclination to crush innovation, in fact. At least in Google’s case, however, while we don't know, of course, what it might do or have done under other competitive conditions, it's impossible to say it isn't a constantly innovating company — and one that has seen it’s share of fantastic failures. Surely a complacent monopolist would have a better (and shorter) track record. But the interesting lesson here is that it isn't just monopolists who prefer not to innovate: their competitors do, too.

Nextag's arguments essentially boil down to this: we prefer not to have to find other ways to make money, and we'd like the government to force Google to maintain our comfortable status quo. To the extent that Nextag's difficulties arise from Google innovating, it is Nextag, not Google, that’s working to thwart innovation and fighting against dynamism.

And even if it were true that some of Google’s innovations were aimed against competitors, no one disputes that Google continually invests in procompetitive improvements of many sorts that alter conditions throughout its ecosystem (including, among many other things, algorithm adjustments targeted at reducing spam). To the extent that these procompetitive improvements turn out to harm self-proclaimed competitors who then complain about them, it highlights the deep ambiguity in differentiating anticompetitive and procompetitive conduct.

This isn't the story as it’s frequently spun, but it is important reality, pointing again toward both the unappreciated benefits of Google’s conduct and the risks of thwarting it to benefit the claims of its competitors.

Recall the furor around Google’s purchase of ITA, a powerful cautionary tale.As of September 2012, Google ranks 7th in visits among metasearch travel sites, with a paltry 1.4% of such visits. Residing at number one? fairsearch.org founding member, Kayak, with a whopping 61%. And how about FairSearch member Expedia? Currently, it’s the largest travel company in the world, and it has only grown in recent years. The DOJ decided, correctly, not to challenge the Google-ITA merger, but that outcome was by no means clear, and, sadly, given the mounting furor around Google now, would almost certainly be challenged today (or worse, not even undertaken by Google in the first place).

Barriers to Entry

One common refrain from Google’s critics is that Google’s access to immense amounts of data used to increase the quality of its targeting presents a barrier to competition that no one else can match, thus protecting Google’s unassailable monopoly. But scale comes in lots of ways. In the first place, as Glenn Manishin notes, data can be bought; there’s plenty out there, and lots of it is for sale:

Data about consumer preferences and behavior — aggregated and (much to the annoyance of privacy advocates) individualized — is also a commodity in our modern economy. Whether credit and commercial transaction data…, product preference and consumer satisfaction data from…or the emerging “big data” marketplace, data can easily be bought, in bulk, for cheap.

Even if scale doesn’t come cheaply, it’s no barrier to entry for challenging firms to have to spend the same (or, in this case, almost certainly less) money Google did in order to replicate its success. Data about consumer interests is available. It’s has never been the case that a firm has to generate its own inputs into every product it produces — and there is no reason to suggest search/advertising is any different.

While researchers at MSR [Microsoft Research] helped develop Bing to compete with Google, the unit was widely viewed as a pretty playground where Bill Gates had indulged his flights of fancy. Now, it is beginning to put Microsoft close to the center of a number of new businesses, like algorithm stores and speech recognition services. “We have more data in many ways than Google,” said Qi Lu, who oversees search, online advertising and the MSN portal at Microsoft."

To defend a claim of monopolization, it is generally required to show that the alleged monopolist enjoys protection from competition through barriers to entry. In Google’s case, the barriers alleged are illusory; competition is, in many ways, really “one click away.” Bing and other recent entrants in the general search business have enjoyed success precisely because they are able to obtain the inputs (in this case, data) necessary to develop competitive offerings.

The Mobile Market

Another, less remarked-upon claim, recently touted in a non-public report by some of Google’s biggest competitors, turns on Google's alleged abuse of Android. But the claims rest on the premise that Google owns — controls — Android. Put simply, it doesn’t, as Danny Sullivan thoroughly and systematically points out. Rather, Android is an open source platform. It is, in fact, the very sort of paradigm shift for software development that Larry Lessig had in mind when he said he “blew it” by not foreseeing the potential challenge to Microsoft’s operating system juggernaut posed by the open-source Linux OS.

Google doesn’t “control” Android, but it does — appropriately — control its own properties accessible on Android, as this article points out:

Restricting access to Google’s apps and ecosystem does not mean that Android is no longer open source. Anyone can download and use Android however they want, but to be a part of Google’s larger ecosystem, manufacturers have to play by Google’s rules. This is important: there is a difference between Android and Google’s apps; the former is open source, the latter is closed source. Android and Google’s apps are mutually exclusive – Google will let anyone use Android, but not just anyone can use Google’s apps or have access to their ecosystem.

The claims in the (still) non-public report don't add up to anything. Here are the arguments, summarized in an article based on a non-public version of the document:

Google used its “desktop search dominance” to fund and give away its Android operating system for free and has since taken over the market for licensable mobile operating systems.

Google is leveraging its positions in desktop search and mobile OS by bundling its Mobile Search with Android “to exclude competition in search on mobile platforms.”

Google is bundling its own mobile services in Android through free preloaded apps “in order to foreclose competing apps and service providers.”

But this is seriously weak sauce. The first of these claims, in fact, should be laughed out of polite company. The claim is that Google has built a “network effect” of sorts that protects its dominance based on its singular ability to earn revenue and then use that revenue to subsidize its offering of free products for users that, in turn, add to its store of data and market share, thus building an unassailable defense against competition.

If obtaining or preserving dominance is simply a function of cash, Microsoft is sitting on some $58 billion of it that it can devote to that end. And JP Morgan Chase would be happy to help out if it could be guaranteed monopoly returns just by throwing its money at Bing (or Blekko or DuckDuckGo or . . .). Of course this is laughable. Like data, capital is widely available, and, also like data, it doesn’t matter if a company gets it from selling search advertising or from selling cars.

And the other arguments are unhelpful to critics, as well. Android may possess a large share of the mobile operating system market, but Apple is hardly a bit player. We shouldn’t forget that Apple seemed to have an unassailable lock on the mobile market itself a few years ago — while today Android claims a substantial portion of the market and Microsoft itself is a new and exciting player here with its long-awaited Windows Phone 8.

Perhaps most important, the claim quoted in the article that “97% of mobile searches are performed on Google” — offered to prove Google’s dominance in the mobile market — assumes a narrow market that is simply unsupportable as a matter of antitrust law or economics.

In the first place most mobile time is spent in apps: 82% of it, as it happens. And while, especially on Android devices, many of these are Google apps, many also aren’t. Moreover, even when users are spending time on Google’s apps, most of these are not advertising-driven, and thus not playing to Google’s alleged core dominance. And the claim that Google bundles its apps with Android and thus forecloses competing apps is factually inaccurate: as noted above, open-source Android is not, in fact, “bundled” with Google’s proprietary apps. Those apps appear on a user’s phone only if device makers opt-in to Google’s Open Handset Alliance; they are not a constituent part of the Android OS.

Advertisers don’t care whether the right (targeted) user sees their ads while playing Angry Birds or while surfing the web on their phone, and users can (and do) seek information online (and thus reveal their preferences) just as well (or perhaps better) through Wikipedia’s app as via a Google search in a mobile browser.

Moreover, mobile is already (and increasingly) a substitute for the desktop:

Moreover, 31% of these current cell internet users say that they mostly go online using their cell phone, and not using some other device such as a desktop or laptop computer. That works out to 17% of all adult cell owners who are “cell-mostly internet users”—that is, who use their phone for most of their online browsing.

Distinguishing mobile search from desktop search is meaningless when users use their tablets at home, perform activities that they would have performed at home away from home on mobile devices simply because they can, and where users sometimes search for places to go (for example) on mobile devices while out and sometimes on their computers before they leave.

More interestingly, perhaps, texting, apps and social media have also seen enormous growth precisely because of the growth of smart phones:

Facebook once again led the pack among social networking brands, with the average Facebook mobile user engaging for more than 7 hours via browser or app in March. The 25.6 million Twitter mobile users (excluding usage via third-party apps) had an average engagement of nearly 2 hours during the month. By comparison, people visiting on their computers spent just 20.4 minutes on Twitter.com.

In other words, Android’s success has likely done more to move users from the Internet (Google’s province) to social media and texting (where Google has almost no purchase) than it has to bolster Google’s bottom line, and this same dynamic may well spell Google’s undoing. If this is monopoly dominance, it’s horribly executed.

At the same time, claims of Google’s dominance stemming from the spread of Android devices omit (intentionally or unintentionally) what may be the most important metric for an antitrust claim rooted in foreclosure: web traffic (and thus access).

On this score, Apple’s iOS still dominates, with 60% of mobile browser traffic to Android’s 24%. Google may be attempting to “leverage” its desktop dominance into mobile (whatever that means), but so far it has been unsuccessful.

But in the larger sense, note what critics’ advancing of this argument means: Mobile is part of the competitive landscape. And not just some abstract "mobile," but mobile apps, devices, operating systems, search and content. All of these present opportunities for Google and its competitors to best each other, and all present avenues of access for Google and its competitors to reach consumers.

And, with Surface and Windows Phone 8, Microsoft is poised for the first time in along time to have a significant entre into a new market that rivals its competitors. This move by Microsoft into mobile/tablets is the first serious effort by the company to make and sell hardware. And by all accounts it's likely to be a success.

Now, did anyone see that coming? Would a hypothetical assessment of Apple’s market and degree of dominance two years ago have accounted for not only Android but also Windows Phone? Not 5 years ago, Blackberry was the dominant smart phone maker, and Symbian the most common mobile OS. Today we've seen the rise of Apple, the subsequent rise of Android, and now the entry into an entirely new market (where are the "we can't get enough scale" arguments here, Microsoft?) by Microsoft.

Each successive wave has brought new business models — the rise of apps, the rise of open apps, the role of handset makers in tweaking operating systems and UIs, the move back to integrated operating system and device, etc.

Conclusion

The lessons from all of this? There are two. First, these are dynamic markets, and it is a fool’s errand to identify the power or significance of any player in these markets based on data available today — data that is already out of date between the time it is collected and the time it is analyzed.

Second, each of these developments has presented different, novel and shifting opportunities and challenges for firms interested in attracting eyeballs, selling ad space and data, earning revenue and obtaining market share. To say that Google dominates “search” or “online advertising” misses the mark precisely because there is simply nothing especially antitrust-relevant about either search or online advertising. Because of their own unique products, innovations, data sources, business models, entrepreneurship and organizations, all of these companies have challenged and will continue to challenge the dominant company — and the dominant paradigm — in a shifting and evolving range of markets.

Competition with Google may not and need not look exactly like Google itself, and some of this competition will usher in innovations that Google itself won’t be able to replicate. But this doesn’t make it any less competitive.

Competition need not look identical to be competitive — that’s what innovation is all about. Just ask those famous buggy whip manufacturers.

Geoffrey A. Manne is the Executive Director of the International Center for Law & Economics and a Lecturer in Law at Lewis & Clark Law School in Portland, OR. ICLE’s funding has come from numerous corporations, organizations and individuals, including Google.